A sluggish stock market and subdued investors resulted in the Shanghai Stock Exchange index falling to 1,284.31, the lowest level since 2001. The 1,300 mark was long considered a psychological threshold for the index. The previous day, the index hit 1,302 and closed at 1,309.

The Shanghai Stock Market has been on a downward slide since June 2001, from its high at 2,245 to as low as 1,284.31. During the past three years, the market has seen various challenges, such as the abolishment of policy of decreasing holding governmental stocks, bankruptcy of mid-cap marketable stock issuers, PT Water Lili corporations losing popularity, non-restricted funding ventures, competition from foreign corporation investors, reformation of policy of issuing new stocks, and others.

Analysts believe that the sluggishness of the Chinese stock market may be due to a combination of recent conflicts and problems that were brewing over time in the local financial sector.

Among issues denting investor confidence are the continual emergence of problems of inappropriate allocation of stock power, rampant and uncontrolled investing, and fraud. Other reasons are the inaccurate measurement of true stock value, inconsistent financial statements and weak policies.